Southern Palladium announced that its first interim combined Mineral Resource update for the MR and UG2 at the Bengwenyama Platinum Group Metal (PGM) project, located on the Eastern Limb of the world class Bushveld Complex, South Africa. The total Mineral Resource (Indicated and Inferred) for the project has now increased from a 3PGE+Au Inferred Resource of 18.80Moz to a 6PGE+Au Indicated and Inferred Resource of 25.12Moz, comprising 5.11Moz Indicated and 20.01Moz Inferred - an overall increase of 34% since drilling began. Exploration Update: To date 13,776m of drilling has been completed from 47 drillholes (of which five are in progress) and 13 deflections.

The success rate of the drilling has been pleasing with only two UG2 intersections being faulted and three intersecting potholes, while in the case of the MR only two drillholes were faulted. Drilling is still focused on the UG2 Payback Area and is progressing well with all five drill rigs currently drilling within the Payback Area. The current focus is to convert the UG2 Payback Area to Indicated Mineral Resource status and then move the drill rigs to areas surrounding the Payback Area and the Horst blocks to the west.

There is limited information on the geological structure within the Southern Horst Block (mainly historical collars only) and it is important to improve the understanding of the geological structure in this area. Drilling is expected to commence within 3 to 4 weeks. A sixth drill rig is scheduled to be on site in late-July /early-August.

Assays are awaited for 15 drillholes. These are expected to start being reported in a week, and all should be available by early August. Prefeasibiity (PFS) study: Metallurgical test work for the UG2 reef is in progress.

Previous metallurgical and process recoveries assumed in the Scoping Study were based on the fact that the mineralisation appears to be very similar to that mined nearby in operating mines along strike to the north and south of Bengwenyama. The sample is a composite of five core samples from four drillholes and has been submitted to SGS in Randfontein, South Africa. The test work comprises flotation efficiency test work (MF2 testing) and bond ball mill work index determinations.

Geotechnical study-work has commenced and will provide the basis of detailed mine-designs and planning for the PFS. Open House Management Solutions (Pty) Ltd. has been appointed to complete the geotechnical study for the PFS. They are completing the geotechnical logging and rock mass classification for the high-level design criteria and stress modelling.

Core samples have been sent to Rocklab Rock Mechanics in Pretoria, South Africa where Uniaxial Compressive Strength (UCS), Triaxial Compressive Strength (TCS), Base Friction Angle and Brazilian Tensile Strength tests will be undertaken. The results are expected by mid July. Mineral Resource Update: The Phase 1a drilling programme was focused on the shallow UG2 reef which resulted in a significantly higher total Mineral Resource.

The drilling programme also intersected the Merensky Reef (MR) approximately 260m above the UG2 reef. These drillholes intersected the MR from the subcrop position, from a depth of approximately 20m to a maximum depth of around 260. The MR is not the main focus of the project but has been updated to be included in the total Mineral Resource for the Bengwenyama Project.

The MR modelling has once again confirmed the geological model for the project area which forms the basis for the ongoing drilling programme. There has been a decrease in the MR Mineral Resource for two main reasons. Increased geological losses have been applied to the Mineral Resource from 10% to 18% and 36%, due to faulting.

There were relatively few new MR intersections in the recent program so the geological losses were not offset by a conversion from Exploration Target to Resources. Further drilling planned to the west of the subcrop should increase the MR Mineral Resource going forward. LG6A and LG6 Chromitite Reefs: Two drillholes, E056 and E057, were drilled in the ‘dome’ area to investigate the lower group (LG) chromitite seams which are exploited for their Cr2O3.

The main LG chromitite seam that is mined economically for its Cr2O3 is the LG6, which is comprised of the LG6A and LG6. Note these seams do not carry any economical PGEs but may be economic with respect to their Cr2O3. In drillhole E057, the LG6A was intersected at 237.73m below surface, approximately 210m below the UG2, while in drillhole E056 it was intersected approximately 325 m below surface.

The available information suggests that the LG6A is approximately 30cm thick with a 20 cm pyroxenite middling between the LG6A and the LG6. The LG6 seems to be split with an upper seam of 30cm with a thin pyroxenite parting with the bottom LG6 seam being approximately 120cm thick. These have been sampled and submitted to the laboratory for analysis.

The aim of these two drillholes was to test for the presence and depth of the LG6's in the dome structural block and the potential access for mining the LG6's from the UG2 underground mining infrastructure. The intersections have shown that the LG6's could be accessible from the UG2 underground mining development due to the up thrown structural blocks. This will require further drilling and investigations.

Once the results have been received from the laboratory, further work will be done on the viability of the LG6A and LG6 as an additional source of Cr2O3 at the Bengwenyama Project which will be included in the Mining Right application.